Human Resources in Japan

Jacqueline Davis

Haldun Unal

March 4, 2009
 Human Resources in Japan

Country Profile and Human Resources Overview

Figure 1.

Geographical Location

Japan or Nippon with its local name, has the third largest economy in the world. It
experienced high growth rates from 1960s through 1980’s. Economic growth slowed starting in
the 1990s and its long-term growth stopped in 2007. In an economy highly dependent on
imported raw materials, characteristics of the workforce and the structure of the manufacturers,
suppliers and distributors helped Japan achieve its economic expansion.

Geert Hofstede Cultural Dimensions Indices has found Japan as a country with very high
power distance, very high uncertainty avoidance, low individualism and very high masculinity
which translate to the collective, consensus and cooperation oriented, embedded and in harmony
characteristics of the Japanese community. These cultural characteristics promoted a highly
uniform education system which provided blue and white collar workers its economy needed.
Such education system largely generated a workforce of similar capabilities and responsibilities,
with similar income, and which is strong in mature middle tech and middle value-added
industries. This caused more gradual improvements than sudden developments in the production.
Being the product of the same culture, management is in search of long-term growth and
adoption of best practices. The philosophy of the management resonates in HR practices where
differences in wages are little, involvement and inclusion are of high priority, communication is
used effectively for coordination and contribution to the collective success is recognized
Decision making (Pudelko, 2005). Low individualism and high uncertainty avoidance is learned
and embedded in the society vastly. It can be seen with the Uncertainty Avoidance Index (UAI)
of Japan clearly. In the chart below compared to world average and to the US, Japan society is
keener on eliminating unpredictability in any aspect of their lives.

Figure 2.

92
UAI
100
90

64
80
70

46
60
50
40
30
20
10
0
J apan World Average United States

According to 2008 estimates Japan’s population is 127,288,416. Approximately 66

million of the population is in the workforce (CIA). Highly educated population is well reflected
to this workforce where the one third of the high school graduates proceeds to higher education
(Economist Intelligence Unit, 2005). 25 percent of the total employed population was with
college or university education which included graduate school and 21 percent was with junior
college or higher professional school education in 2007(JIL).

Females in the country made up 41 percent of the total employment in 2007 (JIL), which,
quantitatively, represents somewhat equal representation if not perfectly. However, as it can be
seen in the Geert Hofstede Cultural Dimensions Japan is a country which can be defined as
highly masculine. “Female employees are still referred to as “office ladies”, a term implying
their relative insignificance compared with their male counterparts (EIU, 2005).” Japan’s
masculinity index (MAS), which is shown in the chart below, is much higher compared to both
the world average and the US (Geert-Hofstede).

Figure 3.
 Employment by Gender 2007

59%
41%

F emale
Male

Figure 4.
95

MAS
100
90
62
80
70
50

60
50
40
30
20
10
0
J apan World Average United States

Retirement age which was 55 years in 1980 was increased to minimum 60 years by law
in April 1998 (Economist Intelligence Unit, 2005).

Unemployment rate was 4.2 percent according to CIA World Fact Book 2008 estimate
(CIA). It went down from 3.5 million in 2003 to 2.65 million in 2008 (JIL). Unemployment
among younger population in both genders is higher. Japanese government has been offering
subsidies and other support programs to hire more workers (EIU).

Life-Time Employment
Although not necessarily favored by the employers, Japanese employment practices features life-
time employment. It correlates with the economic growth years of the economy. Court decisions
which imposed restraints on termination of employees by employers, union militancy in the post-
war era and the public-policies of 1970s for job security have helped this practice become a norm
of employment (Salmon p 63). The result of the practice is excessive numbers of employees in
every industry while the layoffs are not the best option because of the social constraints (EIU).

A World Wide Known Japanese Phenomenon: Karoshi

Japan’s infamous karoshi phenomenon, which is death as a result of working excessive

hours, was responsible from 150 “death from overwork” and 45 “suicide through overwork” in
2004. Death from work overload is called karoshi and death which is caused by mental disability
through work overload or unnatural levels of stress is called “suicide through overwork”. In
order to have the legal system act on karoshi claims, casual association with the work must be
proved (JIL).

Strategy and HR Planning

Japan’s HR management has some major characteristics unlike any of western countries
HR practices. The traditional Japanese promote employees from within based on seniority and
have a lifetime employment philosophy. Recruitment starts for young candidates at local
prestigious high schools and universities. The expectation of the candidate is that they will get
long term on-the-job training, and have life time employment with the hiring organization. The
structure for promotions is based on seniority rather than individual performance. This is an
example of how Japan has a high power distance based on Gert Hofstede’s “Cultural
Dimensions” 1 Individuals holding average or normal worker positions, with no or few
managerial responsibilities, accept the hierarchy of the organization and understand that
eventually they will gain an upper position and seniority. Recently, some Japanese employers
have begun to use a performance based merit system which focuses more on individual
achievement rather than automatic annual entitlement.

Since the traditional practice is the acceptance of hierarchy and entitlement with
seniority, we can conclude that Japan has low individualism. They are recruited at a young age,
given long term on-the-job training, and then eventually managerial skills, because of this
Japanese are very loyal to their colleagues and the organization. It is uncommon in Japan to
witness an individual employee who aspires to climb the corporate ladder and get promoted
before other employees with more seniority, as you may find in western practices.

Japan is high in masculinity. The workers entitled to privileges of OJT and lifetime
employment are men. Usually, companies employ women for less desirable jobs, lower wages,
and fewer benefits. Recent legislation such as the Equal Employment Opportunities Law of
1986 and the Female Welfare Law of 1999 has encouraged more women to enter the workforce

1 Appendix A Cultural Dimensions http://www.geert-hofstede.com/

(Benson, 2007). Below is a comparison of men and women in the labor force of various
countries including Japan and the United States.

Figure 5.

Uncertainty avoidance is high in Japan, because of the philosophy of hierarchy and

advancement through seniority these rules have become the norm. There is less uncertainty
regarding what the measures needed are to be a successful employee in an organization. Japanese
workers know there is a career progression based on age, seniority, and leadership. Finally, long
term orientation is prevalent in Japan with organizations offering lifetime employment to avoid
unemployment costs. Compared to the United States, Japan has maintained a low unemployment
rate.2 Below is a comparison of unemployment rates for both the United States and Japan.

Figure 6.

Recruitment, Careers, Employee Rights and Discipline

2
 Recruitment begins by April every year. Openings in higher management positions are
mostly filled from within the company. Other company employees are seldom hired. One year
before actual hiring firms contact universities. An oral agreement is made between the new
graduate and the company. Both sides adhere to their words most of the time. During the initial
hiring the new employees are not assigned a specific position. They are exploited in the after
they start working (Deller, 1996).

One distinguishing characteristic of the Japanese recruiting system is the collective hiring
of a new group of college graduates. Job search magazines and web sites, introduction or
recommendation by professors or through company hosted job fair or seminars are widely used
for recruiting new college recruits. Public employment security offices are common places for
recruiting mid-career hires. University graduates’ hiring process includes information sessions,
written exams, two or three interviews and finally a conditional job offer. College graduates are
greatly required to be enthusiastic, to have ambition, communication skills and executive ability
according to a 2004 survey (JIL). Recruiting new white-collar staff has been dependent on new
graduates from the same schools which the current employees are graduated from. This type of
recruitment has been favored as it brings in employees which will become “the loyal company
man”, However, it has been criticized for alleged “favoritism and the privilege of old-boy
networks. Another flaw of such system is pointed as the evaluation of the abilities of the new
hires where the generalist abilities receive more attention than the professional and specialist
skills (Salmon, 2004).

An example Deller (1996) highlights the hiring process and the workforce philosophy:
Electronics company Matsushita’s seven principles which are to serve the nation; fairness and
justice; harmony and corporation; striving for perfection; respect and modesty; adaptation and
assimilation and gratitude. In comparison German Daimler-Benz group’s criteria for recruiting
are intellectual ability; teamwork ability; communicative skills; readiness to take the initiative;
readiness to assume responsibility; ability to handle stress and independence.

Criteria of Matsushita are in line with the results of the Geert Hofstede’s Individualism
measurement for Japan which is lower than the world average and the US. Individualism is lower
in countries where people are in closer ties with the social groups.

Figure 7.
 91
IDV
100
90
80
70

46
60

43
50
40
30
20
10
0
J apan World Average United S tates

Workplace Social Justice Issues

The Japanese labor market has been forced to change it’s business strategy to remain competitive
in a changing environment. Globalization, economic recessions, and the needs of younger
workers versus older workers has influenced a necessity to transform to a performance based
evaluations and pay scales. Although, a performance based structure provides equal pay for
equal work for most employee, this has not done much for women in the workplace. Gender
biases flourish in Japanese organizations. Several factors allow for these biases to continue
today. First, women lack the skills and experience to gain full time positions because of their role
as child care givers. Therefore, women tend to take on most part time positions which don’t
allow for very much advancement and long term skill development. Also, Japanese employee
assessments measure ones attitude and loyalty to the company based on their willingness to work
an extreme amount of hours, and sacrifice their home life. Task allocation based on gender is
another obstacle women endure. Job duties such as service and cleaning are socially accepted as
tasks for only women, therefore women are placed in those positions instead of men. Women
then lack the opportunities men have to develop certain skill sets such as leadership and
confidence. This social justice issue directly correlates with the principle of “Dignity of Work
and Rights of Workers” in the Key Principles of Catholic Social Teaching. If the dignity of work
is to be protected, the basic rights of workers must be respected (CST). Diversity training is an
HR initiative that is infiltrating into the Japanese workplace, through globalization. Businesses
are recognizing the advantages of having a diverse workforce. Ideally this initiative may
someday assist business owners with women in the workplace and the individual value they
possess.

Culture & International HR Management

Characteristics of International Human Resources Management Practices:

 Japanese multinational companies prefer to employ parent-country nationals (PCN),
especially, at their senior and middle management positions. There are two reasons behind their
choice: One of them is that integration issue where Japanese and non-Japanese management
systems are very different. Second problem is the language barrier; communication between
headquarters and the subsidiaries is in Japanese. In comparison US multinationals are using more
host-country nationals.

Employing third-country nationals (TCN) is very rare among Japanese multinational

companies. This practice is not favored since harmonization in a foreign country with its
domestic staff is found to be already difficult and having TCNS may complicate the issues.

Duration of Japanese expatriates at over seas is averaging at five years except for Middle
East where such assignments are for two years. Expatriates are not expected to perform well until
the end second year. While good performance is sought when the two year adjustment period
ends failure is a possibility, too, for the Japanese expatriate.

Status shock is the main reason for failure. After working as a team, the increased
number of duties required by overseas assignments can be overwhelming. Work-life balance
may play an adverse effect on the success of the manager if the spouse has difficulties in
adapting to a different environment.

When the Japanese economic success is considered the idea of transferring the Japanese
human resources system to other countries may be questioned. A full adaptation of it by western
companies is not possible, since, group orientation which is a deep rooted part of Japanese
culture and the lifetime employment characteristic can not receive a large scale acceptance
(Deller,1996)by western employees who are more individualistic compared to their Japanese
counterparts. Still, various features of the Japanese personnel policies such as the job rotation are
employed by many enterprises successfully around the world.

Figures

Figure 1. Geographical Location, CIA (2009). The World Fact Book. Retrieved January 27,
2009, from the CIA Website: https://www.cia.gov/library/publications/the-world-
factbook/geos/ja.html
Figure 2. UAI. Data from Geerte-Hofstede (2009), Geerte-Hofstede Cultural Dimensions,
Retrieved January 01, 2007, from http://www.geert-hofstede.com/hofstede_dimensions.php

Figure 3. Employment by Gender 2007, Data: JIL (2009). Unemployment and Employment
Insurance, Retrieved March 01, 2009, from the Japan Institute for Labour Policy and Training
Website: http://www.jil.go.jp/english/estatis/eshuyo/200903/e0206.htm

Figure 4. MAS. Data from Geerte-Hofstede (2009), Geerte-Hofstede Cultural Dimensions,

Retrieved January 01, 2007, from http://www.geert-hofstede.com/hofstede_dimensions.php

Figure 5. Labor force participation rates by sex, selected countries, 2007.

Figure 6. Unemployment rates between US and Japan.

Figure 7. IDV. Data from Geerte-Hofstede (2009), Geerte-Hofstede Cultural Dimensions,

Retrieved January 01, 2007, from http://www.geert-hofstede.com/hofstede_dimensions.php

References

Benson, John (2007). The prospect of gender diversity in Japanese employment.

The International Journal of Human Resource Management. 18.5, 890-907

CIA (2009). The World Fact Book. Retrieved January 27, 2009, from the CIA Website:
https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html

Deller F., Flunkert U. (1996). Recruitment and development of up-and-coming managers in

Germany. Career Development International.1(2). Retrieved February 24, 2009 from the UIW
Library databases

EIU (2005). Country Commerce 2005, Economic Intelligence Unit, Retrieved February 01, 2005,
from the UIW Library databases

Geerte-Hofstede (2009), Geerte-Hofstede Cultural Dimensions, Retrieved January 01, 2007,

from http://www.geert-hofstede.com/hofstede_dimensions.php

JIL (2009). Japanese Working Life, Retrieved March 01, 2009, from the Japan Institute for
Labour Policy and Training Website: http://www.jil.go.jp/english/workinglifeprofile/08-
09/3.pdf)

JIL (2009). Unemployment and Employment Insurance, Retrieved March 01, 2009, from the
Japan Institute for Labour Policy and Training Website:
http://www.jil.go.jp/english/estatis/eshuyo/200903/e0206.htm

JIL (2009). Labor Situation in Japan and Analysis, Retrieved March 01, 2009 from the Japan
Institute for Labour Policy and Training Website: http://www.jil.go.jp/english/laborsituation/06-
07/chapter3.pdf

Pudelko, M. (2005). A comparison of HRM systems in the USA, Japan and Germany in their
socio-economic context. Human Resources Journal 16(2). Retrieved on February 01, 2009, from
the UIW Library databases

Salmon, J. (2004). HRM in Japan. In P.S.Budhwar (Ed), Managing human resources in pacific
asia (pp 61-73). London: Routledge.

Appendix

Definiton of Geert Hoftsede Cultural Dimensions

Power Distance Index (PDI) that is the extent to which the less powerful members of
organizations and institutions (like the family) accept and expect that power is distributed
unequally. This represents inequality (more versus less), but defined from below, not from
above. It suggests that a society's level of inequality is endorsed by the followers as much as by
the leaders. Power and inequality, of course, are extremely fundamental facts of any society and
anybody with some international experience will be aware that 'all societies are unequal, but
some are more unequal than others'.
Individualism (IDV) on the one side versus its opposite, collectivism, that is the degree to
which individuals are inte-grated into groups. On the individualist side we find societies in which
the ties between individuals are loose: everyone is expected to look after him/herself and his/her
immediate family. On the collectivist side, we find societies in which people from birth onwards
are integrated into strong, cohesive in-groups, often extended families (with uncles, aunts and
grandparents) which continue protecting them in exchange for unquestioning loyalty. The word
'collectivism' in this sense has no political meaning: it refers to the group, not to the state. Again,
the issue addressed by this dimension is an extremely fundamental one, regarding all societies in
the world.
Masculinity (MAS) versus its opposite, femininity, refers to the distribution of roles between the
genders which is another fundamental issue for any society to which a range of solutions are
found. The IBM studies revealed that (a) women's values differ less among societies than men's
values; (b) men's values from one country to another contain a dimension from very assertive
and competitive and maximally different from women's values on the one side, to modest and
caring and similar to women's values on the other. The assertive pole has been called 'masculine'
and the modest, caring pole 'feminine'. The women in feminine countries have the same modest,
caring values as the men; in the masculine countries they are somewhat assertive and
competitive, but not as much as the men, so that these countries show a gap between men's
values and women's values.
Uncertainty Avoidance Index (UAI) deals with a society's tolerance for uncertainty and
ambiguity; it ultimately refers to man's search for Truth. It indicates to what extent a culture
programs its members to feel either uncomfortable or comfortable in unstructured situations.
Unstructured situations are novel, unknown, surprising, different from usual. Uncertainty
avoiding cultures try to minimize the possibility of such situations by strict laws and rules, safety
and security measures, and on the philosophical and religious level by a belief in absolute Truth;
'there can only be one Truth and we have it'. People in uncertainty avoiding countries are also
more emotional, and motivated by inner nervous energy. The opposite type, uncertainty
accepting cultures, are more tolerant of opinions different from what they are used to; they try to
have as few rules as possible, and on the philosophical and religious level they are relativist and
allow many currents to flow side by side. People within these cultures are more phlegmatic and
contemplative, and not expected by their environment to express emotions.

Long-Term Orientation (LTO) versus short-term orientation: this fifth dimension was found in
a study among students in 23 countries around the world, using a questionnaire designed by
Chinese scholars It can be said to deal with Virtue regardless of Truth. Values associated with
Long Term Orientation are thrift and perseverance; values associated with Short Term
Orientation are respect for tradition, fulfilling social obligations, and protecting one's 'face'. Both
the positively and the negatively rated values of this dimension are found in the teachings of
Confucius, the most influential Chinese philosopher who lived around 500 B.C.; however, the
dimension also applies to countries without a Confucian heritage.